We don’t blame you if you haven’t been following the Check Clearing for the 21st Century Act (H.R. 5414). After all, the title doesn’t sound like something of interest to online bankers. But the impact could be profound.

The act clears the way for check images to be used in the clearing process, eliminating the need for paper to be shuffled around the country. The check image itself will have all the legal power of the original paper. From the bank’s standpoint, it will eventually put an end to the costly return of paper checks, an option used by 46 million U.S. households according to the Consumers Union.

Assuming the Act becomes law, the back-office cost-savings and fraud-reduction potential will drive adoption rapidly. The change will be a boon for online banking, providing three new reasons for going online:

(1)     The ability to view, store, and print images of DEPOSITED ITEMS (at branch or ATM), a significant new benefit, especially for small businesses.

(2)     For those with check truncation, online banking becomes the only way to view, store, and print hand-written checks.

(3)     Eventually, low-cost scanner/readers will be available for the home and small business market, enabling users to self-deposit checks directly into their own PC, skipping the trip to the branch/ATM altogether.

The only downside, at least for those with branch networks, is that check truncation at the PC will eliminate one of the last reasons to visit the branch. Consider yourselves warned.